Payment methods of health insurance system in Thailand Samrit Srithamrongsawat Health Insurance System Research Office Samrit.strsw@yahoo.co.th

Outline of presentation Overview of payment methods of the Thai health insurance schemes Universal Coverage Scheme Civil Servant Medical Benefit Scheme Social Security Scheme Effects of payment methods: the Thai experiences

Thailand: historical development Establishment of prepayment schemes User fees Informal exemption 1945 Expansion of prepayment schemes 1970 1975 LIC 1980 CSMBS 1-3rd NHP 1962-76 Provincial hospitals 1983 CHF 1990 SSS 1980 SSS CSMBS LIC  MWS 4th -5th NHP (1977-86) District hospitals Health centers 1990 Universal Coverage 1994 PVHI Before 2001, health care system in Thailand is a public-private mixed system. A user fee was introduced at the beginning of establishment of government health facilities in 1945. At the early phase of development, the government put emphasis on expansion of basic health infrastructure starting by establishing provincial hospitals in all provinces, expanding district hospital to cover all districts and health center in all sub-districts throughout the country, For social health protection, various health insurance and welfare schemes were established for specific target population during 1970 – 1990. Private employees were the first group being protected for work-related illness in 1974 followed by the poor in 1975 and government workers and their dependents in 1980. A voluntary community health insurance started in 1983 as a choice for those who were not eligible to the Low Income scheme. For those in private sector, the social security scheme was established in 1990 to cover non-work related illness. From 1990 onward, there was rapid expansion of health insurance coverage according to the expansion of low income scheme to cover other groups i.e. older people, children under 12, students, disabled persons, veterans, monks, evolving of the Health Card scheme from a community financing to be a publicly subsidized voluntary health insurance scheme , and expansion of the Social Security Scheme to cover workers in small enterprises. In addition, there were strong social movements toward universal healthcare coverage during this period and after the 2001 general election, the government announced the UC policy by incorporating the Low Income Scheme with the Health Card Scheme and extend to cover those previously uninsured. SSS 2000 2001 Universal Coverage CSMBS Health Infrastructure 2001

Coverage of health insurance: 1991-2003 Currently, there are three main health insurance systems which cover 95% of the Thai populations. The Civil Servant Medical Benefit Scheme cover around 9% of the populations similar to the Social Security Scheme. And the UC scheme covers around 47 million or around 75% of the populations. Source: HWS 1991, 1996, 2001, 2003

Age distribution by insurance scheme Distribution of age group by insurance scheme is presented in this slide. Age group distribution of the UC scheme is comparable with that of total population, 28% are those aged below than 15 years old and those aged 60 years old and above account for 10%. For the SSS, nearly all of them are aged between 15 – 59 years old, only 1% of them are aged 60 years old or above. Those aged 60 years old or above are more prevalent among CSMBS members, 20%

Civil Servant Medical Benefit Scheme (CSMBS) Nature Fringe benefits, tax-based system Financing model Public reimbursement model Beneficiaries Government workers, pensioners and their dependents (5.4 million) Benefit package Comprehensive package including OP, IP, and private ward in public hospitals Service providers Free choice of public facilities Access to private hospitals only in case of emergency Payment method Retrospective fee-for-services This slide summarize characteristics of the Civil Servant Medical Benefit Scheme. It is a fringe benefits to compensate low salary of public workers and financed from tax-based system. The scheme employs a public reimbursement model. Beneficiaries include government workers, pensioners and their dependents. Currently, it covers around 5.4 million people. The scheme provides a comprehensive health services package, including ambulatory care, medicines, dental care, and hospital care. Beneficiaries have free choice of public facilities and can access to private hospitals for inpatient care only in case of emergency but will be reimbursed up to a ceiling. The scheme pay providers by retrospective fee-for-services.

Social Security Scheme (SSS) Nature Social health insurance, compulsory contributions from employer, employee, and the government Financing model Public contracted model with both public and private hospitals Beneficiaries Private employees (8.47 million) Benefit package Comprehensive package including OP, IP, maternal care, dental care Service providers Contracted public and private hospitals with 100-bed or above Payment method Inclusive capitation Additional payments for utilization rate, chronic conditions, fee schedule for high cost services, and fixed amount for AE, dental care, maternity For Social Security Scheme, this is a compulsory health insurance for private formal sector. The contributions are equally paid by employees, employers, and the government. The scheme employs a public contracted model with both public and private hospitals. Currently, it covers around 8.5 million populations. The scheme provides a comprehensive health services package, including ambulatory care, medicines, dental care, hospital care, and maternal care. Beneficiaries have free choice to register with both public and private hospitals. Hospitals with 100 bed or over are chosen as main contractors since majority of beneficiaries are residing in urban areas. The scheme pay contracted hospitals mainly by inclusive capitation covering both outpatient and inpatient services provided to registered members. The contracted hospitals also receive additional payments according to utilization rate, severity of cases, and providing high cost services. The scheme also reimburse beneficiaries by fixed amount for services received outside their contracted hospitals in case of emergency, dental care, and maternal care.

Universal Coverage Scheme (UCS) Nature Entitlement, tax-based system Financing model Public contracted model, capitation 1,899 THB in 2007 Beneficiaries Thai citizens uncovered by SSS and CSMBS (47 million) Benefit package Comprehensive package including prevention and promotion services (PP) and accredited alternative medicines with an exclusion list of some services Service providers Contracted public and private hospitals and requiring all hospital to establish one primary care unit (PCU) for every 10,000-15,000 registered population Payment method OP,PP - Capitation IP - DRG weighted global budget A/E and HC OP – point system, AE/HC IP –DRG weighted global budget For the UC scheme. It is an entitlement, tax-based system. The scheme employs a public contracted model with both private and public hospitals. In 2007, the scheme receive government budgets of 1,899 Baht per capita, equivalent to 54USD. All Thai citizens not covered by the SSS and CSMBS will be covered by this scheme, currently it covers around 47 million or 75% of the populations The scheme provides a comprehensive health services package, including ambulatory care, medicines, dental care, hospital care, and prevention and promotion services. It should be noted that personal health promotion and prevention services are provided to all Thais not just only those covered by the UC scheme. All public hospitals and accredited private hospitals are chosen as main contractors and all of them are required to set up one primary care unit for every 10,000 – 15,000 registered members. Capitation payment is chosen to pay for ambulatory care and prevention and promotion services. A Diagnosis Related Group with global budget is employed to pay for inpatient care. In order to enable access to accident emergency services and high cost care, a reinsurance system is also established and paying hospitals by point system for outpatient services and DRG with global budget for inpatient services.

Historical development: payment methods 1991 Inclusive capitation   Mixed allocation 1993-4 Global budget 1995 Adjusted utilization Fee-schedule: HC 1998 Per capita allocation 1999 Demand side Piloting DRG/ Capitation DRG system for HC 2000 control  2001 Adjusted for risks 2002 Capitation and DRG weighted global budget 2005 Age-adjusted capitation 2006 Fee-schedule Performance-based payment Year SSS CSMBS MWS Health Card Uninsured This slide summarize historical development of payment methods in Thailand. Inclusive capitation was first introduced in 1991 by the Social Security Scheme and additional payments were added in later to collect the problem of selection bias according to free choice of beneficiaries to register with contracted hospitals. Per capita budget allocation was first implemented by the previous Health Card scheme, a public subsidized voluntary health insurance scheme, in 1994 when the government started to provide equal matching funds for the scheme. The Medical Welfare Scheme for the poor and other vulnerable groups also moved away from supply-side allocation formula to a per capita budget allocation later in 1998. A system of Diagnosis Related Group with global budget and capitation payments were piloted by the Medical Welfare Scheme and the Health Card scheme in 1999 and these two payment methods have been adopted as main payment methods by the UCS.

Aim and objectives of purchasing Ensuring good quality and efficient services are provided to beneficiaries Objectives To ensure good health To solve health problems Response to social expectation To control cost Theoretically, payment method is a major tool of purchasing apart from other components which aims to ensure that good quality and efficient services will be provided to beneficiaries. A good purchasing function should bring about good health of beneficiaries, and once they get health problem, it will be solved appropriately. Furthermore, providers should response to the expectation of society and it should be able to control costs to an appropriate level.

Payment methods and provider risk Per Discharged Per member IP and OP DRGs Retrospective Full cost Full Capitation Bundled Hospital -MD DRGs Discount per diem Different payment methods and unit of services purchased provide different financial risk on providers. Retrospective fee-for-services system will put all financial risk on payers, in oppositely, a full capitation or inclusive capitation will shift all financial risk to providers. Other payment methods are in between. Hospital IP DRGs Minimum Provider Risk Maximum

Payment & provider behavior Prevent health problem Deliver services Responsiveness Contain costs Line item budget +/ - - - + /- + + + Global budget + + Capitation DRGs FFS - - - Concerning effects of payment methods on provider behavior, this slide summarize incentives effects according to different payment methods. A more aggregated payment methods such as global budget and capitation payment likely to provide more incentives of providers to contain cost since they bear all financial risk but they may have less incentives to provide services to beneficiaries. For less aggregated payment methods like fee-for-services will provide more incentives for providers to provide more services to gain more revenues and providers will have no incentives to control costs as all financial risks are born on payers, particularly when the payments are made by third payers. WHR 2000

Effects of payment methods: the Thai experiences

DALYs 1999: 2004 Male Female 1999 2004 HIV/AIDS 960,087 641,000 372,974 293,000 Traffic accident 510,907 600,000 114,963 136,000 Stroke 267,567 300,000 280,673 302,000 Liver cancer 248,083 295,000 118,384 141,000 Diabetes 168,372 166,000 267,158 263,000 TB 93,695 89,000 60,643 61,000 Cataract 96,091 41,000

Use of ambulatory care Use of ill persons For service utilization, seeking ambulatory care once getting ill was comparable by insurance scheme but it was different by age group. Once getting ill, children and older persons were more likely to receive care from health facilities, 80% compared with only 70% of working age populations. It should be noted that SSS old beneficiaries were excluded from the analysis due to small number of populations. For services utilization covered by insurance scheme, children covered by CSMBS were less likely to get care covered by their scheme than those covered by UC did. Use of services covered by insurance scheme of working age populations was comparable by insurance scheme, 50% of overall use. For older beneficiaries, they got care covered by insurance scheme 60% and comparable between the UC and CSMBS. Use of ill persons Use of ill persons covered by the scheme Source: 2005 HWS

Use of appointed services of patients with chronic conditions For getting appointed care of those with chronic conditions, it was different by age group and type of insurance for both overall use and use of services covered by insurance scheme. Older beneficiaries were more likely to get appointment and visit health facilities in the previous month than younger beneficiaries did, and CSMBS beneficiaries were more likely to get appointment and care than those covered by the other two schemes were. SSS beneficiaries with chronic conditions sought less care than UC and CSMBS beneficiaries did. Take-up of insurance benefit among those with chronic conditions was much higher than those getting ambulatory care, more than 80-90% compare with only 60% of ambulatory care. Take-up of benefits Use services Source: 2005 HWS

Hospitalization Days of stay Being admitted Take-up of benefits For hospitalization, the probability of being admitted of UC and CSMBS was comparable among children and working age groups; however, among older people, CSMBS beneficiaries were more likely to be admitted than those covered by the UC in addition to frequency of admission. SSS beneficiaries were less likely to be admitted than those covered by the other two schemes. Length of stay was different by type of insurance. Number of days stayed in hospital of CSMBS beneficiaries were greater than those of UC and SSS beneficiaries among working age group and older people. Take up of benefit for admission was similar to that of getting chronic care, 80-90% and comparable between types of health insurance. Number of admission Take-up of benefits Source: 2005 HWS

Responsiveness Enabling access Equal treatment Financial protection Prompt treatment* ABAC (2006)

Responsiveness Equal treatment* Financial difficulties* Good quality* Satisfaction ABAC (2006)

FFS: CSMBS experiences Cabinet resolution, full pay for non ED, limit ceiling LOS of private R&B and stringent private admission Cost escalating according to FFS payment system is good demonstrated by CSMBS. Health expenditures of the scheme increased rapidly around 15% annually. This is a major concern of the government, however, few efforts have been made by the government in order to contain the costs. In 1999, when the country when into economic crisis, demand side measures were introduced, limiting prescription to ED drugs and days of stay in private ward; however, experiences show that the demand side measured had effect on in the first year of its introduction then the costs continued to increase.

SSS: Per capita expenditures 1998-2005 Experiences from the SSS show that the scheme was quite successful in controlling health care costs. Mark increase in the per capita expenditures was partly due to increase in the capitation rate, for example the capitation rate in 2005 was increased from 1,100 Baht to 1,250 Baht, in addition to increase in reimbursement rate of additional payments and expanding of benefits i.e. dental care, maternal benefit.

UCS: approved capitation budget and estimated expenses 2002 - 2006 Difference from the other two schemes, the UC scheme faced with inadequate budget provided by the government. The capitation budget provided by the government in 2002-3 was 1,202 Baht, and even thought it increased subsequently to 1,308, 1,396, 1,659, and 1,899. it was estimated that the annual shortfall during 2002- 2006 of the scheme was 200 - 400 Baht per capita. This is partly due to totally depending on government budgets and have to compete with other social objectives. Average annual increase in per capita estimated expenses could be explained by increase in utilization rate and cost inflation.

Conclusions There were both improving and worsening health problems among Thai populations . Provider’s bias in service provision was evident by insurance scheme, particularly for chronic conditions and hospitalization. Remaining issues of concern Quality of medical are Outcome of treatment

Conclusions Health insurance systems in Thailand provide fairly responsiveness to their beneficiaries and need further improvement. Close-end payment methods are more effective in controlling costs than open-end payment method.